Q2 '11 Highlights:
- Adjusted EBITDA increased by $3.0M to a positive $1.1M
- Gross Margin rose 140 bps to 38.8% and 160 bps over Q1 '11
- Internet Sales increased 23% with e-commerce penetration up 670
bps to 46.1%, leading the televised electronic retailing
industry
ValueVision Media, Inc. (NASDAQ: VVTV), a multichannel
electronic retailer operating under the "ShopNBC" brand via TV,
Internet, mobile and social media, today announced improved
operating results for its fiscal second quarter ended July 30,
2011. Results will be reviewed in a conference call and webcast
today at 11:00 a.m. ET, details below.
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points)
Three months ended Six months ended
------------------------------ ----------------------------
7/30/11 7/31/10 7/30/11 7/31/10
Q2 '11 Q2 '10 Change 1H '11 1H '10 Change
---------- ---------- -------- --------- --------- --------
Net Sales $ 132.1 $ 126.2 4.7% $ 275.7 $ 251.2 9.8%
Gross Profit $ 51.3 $ 47.2 8.7% $ 104.7 $ 92.9 12.7%
EBITDA, as
adjusted $ 1.1 $ (1.9) +$3.0 $ 4.2 $ (6.2) +$10.4
Loss Before Debt
Extinguishment $ (4.5) $ (7.7) +$3.2 $ (7.7) $ (18.7) +$11.0
Debt
Extinguishment*$ - $ - $ - $ (25.7) $ - n/a
---------- ---------- -------- --------- --------- --------
Net Loss $ (4.5) $ (7.7) +$3.2 $ (33.4) $ (18.7) $ (14.7)
========== ========== ======== ========= ========= ========
Homes (Average
000s) 78,865 75,571 4.4% 78,546 75,715 3.7%
Net Shipped Units
(000s) 1,158 1,195 -3.1% 2,292 2,273 0.8%
Average Price
Point $ 105 $ 97 8.2% $ 111 $ 103 7.8%
Return Rate % 22.7% 20.6% +210bps 21.9% 19.9% +200bps
Gross Margin % 38.8% 37.4% +140bps 38.0% 37.0% +100bps
Internet Sales,
as a %
of Total Sales 46.1% 39.4% +670bps 45.5% 39.5% +600bps
New Customers: 12
month rolling 539,671 573,545 -5.9% n/a n/a
Active Customers:
12 month rolling 1,130,999 1,089,682 3.8% n/a n/a
*Debt Extinguishment expense was a one-time, non-cash charge attributed to
early redemption of the GE Series B Preferred Stock in F11 Q1
"For the fourth consecutive quarter, we posted net sales, gross
margin and adjusted EBITDA improvements, including positive
adjusted EBITDA," said Keith Stewart, ValueVision CEO. "I am
pleased with the gross margin progress our team continues to make
and our ability to be nimble in response to changing consumer
preferences. Additionally in Q2, we continued to lead the televised
electronic retailing industry in driving sales via the Internet and
mobile devices, which were up 23% vs. last year."
William McGrath, EVP & CFO, stated, "First half 2011
adjusted EBITDA of $4.2 million is the best we have achieved in
over five years, and represents a $10.4 million improvement vs.
last year. Also during the first six months, gross profit dollars
are up double digits and our gross margin rate of 38% is a 10-year
company record. Additionally, our national cable and satellite
footprint increased by 4% vs. last year to approximately 79
million. This powerful mass distribution channel, which is heavily
integrated into our Internet and mobile platforms, is a key
differentiator of our business and driver of our long-term growth
plan."
Mr. McGrath added, "We recognize that some variability in
quarterly sales performance is to be expected, particularly as we
build out our merchandise categories and strengthen our team.
During the month of June in Q2, sales and gross profit performance
was flat while the months of May and July resulted in 10% top line
growth and 15% increase in gross profit dollars. Looking ahead, we
remain committed to our long-term sales and adjusted EBITDA growth
goals."
Q2 Review ValueVision's Q2 sales growth
was impacted by a temporary mid-quarter shift in consumer demand
away from high-ticket, low-margin Consumer Electronics toward
higher margin Jewelry and Health & Beauty products. The shift
toward Jewelry led to a slight increase in Q2 product returns and
lower new customer activity, which are trends normally associated
within the Jewelry category.
The Watch category benefitted from a more diverse product mix
and achieved improved productivity per minute with attractive
margins, as part of a strategically planned reduction in air-time.
Health & Beauty sales and margins remained strong in Q2, driven
by a number of new product launches along with a core base of
skincare and beauty tools.
Fashion & Accessories achieved growth in sales, margin rate
and productivity on the strength of well-received fashion
introductions in apparel, handbags and shapewear. Performance in
the Home category built on the successes of Q1 product launches,
achieving strong second quarter sales in cookware, table top and
bedding.
Bob Ayd, President, commented, "Overall, we continued to make
progress across our product categories in both top line and gross
margin rates despite the temporary shift in consumer demand. During
the first six months of 2011, our merchandise teams laid a strong
foundation with a number of innovative product initiatives that
will position us well for the back half of this year. These plans,
along with a compelling line-up of high-profile brands,
entertaining guests and exciting programming, add to our confidence
in growing the business and further driving key operating
metrics."
Balance Sheet Update ValueVision ended Q2
2011 with cash and cash equivalents totaling $42.5 million,
including $5.0 million in restricted cash and $25 million in
long-term debt. As planned, inventory levels rose to $52.7 million
as compared to $42.2 million in Q1 2011, as the merchandise mix
shifted more toward product categories held in the Company's
inventory.
Conference Call / Webcast Today, Tuesday,
August 16 at 11:00 a.m. ET:
Webcast/Replay:
http://phx.corporate-ir.net/playerlink.zhtml?c=76332&s=wm&e=4170596
Telephone: 866-543-6403; Passcode:
88603177
Adjusted EBITDA EBITDA represents net loss
for the respective periods excluding depreciation and amortization
expense, interest income (expense) and income taxes. The company
defines Adjusted EBITDA as EBITDA excluding debt extinguishment,
non-operating gains (losses); non-cash impairment charges and
write-downs; restructuring; and non-cash share-based compensation
expense. The company has included the term "Adjusted EBITDA" in our
EBITDA reconciliation in order to adequately assess the operating
performance of our "core" television and internet businesses and in
order to maintain comparability to our analyst's coverage and
financial guidance, when given. Management believes that Adjusted
EBITDA allows investors to make a more meaningful comparison
between our core business operating results over different periods
of time with those of other similar companies. In addition,
management uses Adjusted EBITDA as a metric measure to evaluate
operating performance under its management and executive incentive
compensation programs. Adjusted EBITDA should not be construed as
an alternative to operating income (loss), net income (loss) or to
cash flows from operating activities as determined in accordance
with generally accepted accounting principles and should not be
construed as a measure of liquidity. Adjusted EBITDA may not be
comparable to similarly entitled measures reported by other
companies. The company has included a reconciliation of Adjusted
EBITDA to net loss, its most directly comparable GAAP financial
measure, in this release.
Forward-Looking Information This release
contains certain "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and
accordingly are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the
expectations contained herein due to various important factors,
including (but not limited to): consumer preferences, spending and
debt levels; interest rates; competitive pressures on sales,
pricing and gross profit margins; the level of cable and satellite
distribution for the company's programming and the fees associated
therewith; the success of the company's e-commerce and new sales
initiatives; the success of its strategic alliances and
relationships; the ability of the company to manage its operating
expenses successfully; working capital levels; the ability of the
Company to establish and maintain acceptable commercial terms with
third party vendors and other third parties with whom the Company
has contractual relationships; changes in governmental or
regulatory requirements; litigation or governmental proceedings
affecting the company's operations; and the ability of the company
to obtain and retain key executives and employees. More detailed
information about those factors is set forth in the company's
filings with the Securities and Exchange Commission, including the
company's annual report on Form 10-K, quarterly reports on Form
10-Q, and current reports on Form 8-K. The company is under no
obligation (and expressly disclaims any such obligation) to update
or alter its forward-looking statements whether as a result of new
information, future events or otherwise.
About ValueVision Media ValueVision Media,
Inc. operates "ShopNBC," a multichannel
electronic retailer that enables customers to interact and "Shop
Anywhere" via TV, Internet, mobile devices, Facebook, Twitter and
YouTube. The ShopNBC television network reaches over 79 million
homes via cable and satellite in addition to nationwide streaming
at www.ShopNBC.com. ShopNBC focuses on the merchandise categories
of Home & Consumer Electronics, Health & Beauty, Fashion
& Accessories, and Jewelry & Watches. Annual revenues from
approximately 1.1 million active customers are over $560 million,
of which 41% are Internet-based transactions. For more information,
please visit www.ShopNBC.com.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
July 30, January 29,
2011 2011
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 37,503 $ 46,471
Restricted cash and investments 4,961 4,961
Accounts receivable, net 82,930 90,183
Inventories 52,720 39,800
Prepaid expenses and other 5,240 3,942
------------ ------------
Total current assets 183,354 185,357
Property and equipment, net 28,181 25,775
FCC broadcasting license 23,111 23,111
NBC Trademark License Agreement, net 3,298 928
Other Assets 2,895 3,188
------------ ------------
$ 240,839 $ 238,359
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 59,817 $ 58,310
Accrued liabilities 41,934 43,405
Current portion of accrued dividends - 1,355
Deferred revenue 728 728
------------ ------------
Total current liabilities 102,479 103,798
Deferred revenue 61 425
Long Term Payable - 4,894
Term Loan 25,000 25,000
Accrued Dividends - Series B Preferred Stock - 6,491
Series B Mandatorily Redeemable Preferred Stock - 14,599
$.01 par value, 4,929,266 shares authorized; 0
and 4,929,266 shares issued and outstanding
------------ ------------
Total liabilities 127,540 155,207
Commitments and Contingencies
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 48,472,205 and 37,781,688
shares issued and outstanding 485 378
Warrants to purchase 6,014,744 shares of
common stock 602 602
Additional paid-in capital 400,847 337,421
Accumulated deficit (288,635) (255,249)
------------ ------------
Total shareholders' equity 113,299 83,152
------------ ------------
$ 240,839 $ 238,359
------------ ------------
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Six Month
Periods Ended Periods Ended
------------------------ ------------------------
July 30, July 31, July 30, July 31,
2011 2010 2011 2010
----------- ----------- ----------- -----------
Net sales 132,137 $ 126,177 $ 275,670 $ 251,154
Cost of sales 80,869 79,021 171,010 158,261
----------- ----------- ----------- -----------
Gross profit 51,268 47,156 104,660 92,893
Margin % 38.8% 37.4% 38.0% 37.0%
Operating expense:
Distribution and
selling 46,313 45,021 92,789 91,063
General and
administrative 5,408 4,795 9,972 9,562
Depreciation and
amortization 3,086 3,527 6,068 7,218
Restructuring costs - 50 - 426
----------- ----------- ----------- -----------
Total operating
expense 54,807 53,393 108,829 108,269
----------- ----------- ----------- -----------
Operating loss (3,539) (6,237) (4,169) (15,376)
----------- ----------- ----------- -----------
Other income (expense):
Interest income 44 9 44 51
Interest expense (944) (2,095) (3,546) (3,945)
Debt extinguishment - - (25,679) -
----------- ----------- ----------- -----------
Total other expense (900) (2,086) (29,181) (3,894)
----------- ----------- ----------- -----------
Loss before income taxes (4,439) (8,323) (33,350) (19,270)
Income tax (provision)
benefit (17) 630 (36) 606
----------- ----------- ----------- -----------
Net loss
$ (4,456) $ (7,693) $ (33,386) $ (18,664)
=========== =========== =========== ===========
Net loss per common
share $ (0.09) $ (0.24) $ (0.75) $ (0.57)
=========== =========== =========== ===========
Net loss per common
share
---assuming dilution $ (0.09) $ (0.24) $ (0.75) $ (0.57)
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding:
Basic 48,131,218 32,703,164 44,393,198 32,691,334
=========== =========== =========== ===========
Diluted 48,131,218 32,703,164 44,393,198 32,691,334
=========== =========== =========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of Adjusted EBITDA to Net Loss:
For the Three
Month Periods For the Six Month
Ended Periods Ended
------------------ ------------------
July 30, July 31, July 30, July 31,
2011 2010 2011 2010
-------- -------- -------- --------
Adjusted EBITDA (000's) $ 1,096 $ (1,943) $ 4,214 $ (6,234)
Less:
Debt extinguishment - - (25,679) -
Restructuring costs - (50) - (426)
Non-cash share-based compensation (1,479) (717) (2,175) (1,498)
-------- -------- -------- --------
EBITDA (as defined) (a) (383) (2,710) (23,640) (8,158)
-------- -------- -------- --------
A reconciliation of EBITDA to net
loss is as follows:
EBITDA (as defined) (a) (383) (2,710) (23,640) (8,158)
Adjustments:
Depreciation and amortization (3,156) (3,527) (6,208) (7,218)
Interest income 44 9 44 51
Interest expense (944) (2,095) (3,546) (3,945)
Income taxes (17) 630 (36) 606
-------- -------- -------- --------
Net loss $ (4,456) $ (7,693) $(33,386) $(18,664)
======== ======== ======== ========
(a) EBITDA as defined for this statistical presentation
represents net income (loss) for the respective periods excluding
depreciation and amortization expense, interest income (expense)
and income taxes. The Company defines Adjusted EBITDA as EBITDA
excluding debt extinguishment, non-operating gains (losses);
non-cash impairment charges and writedowns, restructuring costs;
and non-cash share-based compensation expense.
Management has included the term Adjusted EBITDA in its EBITDA
reconciliation in order to adequately assess the operating
performance of the Company's "core" television and Internet
businesses and in order to maintain comparability to its analyst's
coverage and financial guidance, when given. Management believes
that Adjusted EBITDA allows investors to make a more meaningful
comparison between our core business operating results over
different periods of time with those of other similar companies. In
addition, management uses Adjusted EBITDA as a metric measure to
evaluate operating performance under its management and executive
incentive compensation programs. Adjusted EBITDA should not be
construed as an alternative to operating income (loss), net income
(loss) or to cash flows from operating activities as determined in
accordance with GAAP and should not be construed as a measure of
liquidity. Adjusted EBITDA may not be comparable to similarly
entitled measures reported by other companies.
Contact: Investor / Media Relations: Anthony Giombetti
ValueVision Media, Inc. agiombetti@shopnbc.com (612) 308-1190
Investors: Norberto Aja, David Collins, Jennifer Neuman
Jaffoni & Collins vvtv@jcir.com (212) 835-8500
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